Blog

08/07/17

Burgundy Ties

We are in a series outlining the big ideas that would serve as the foundation for Tim’s proposed healthcare reform plan. Click here to find the prior posts.

I remember the first time my mom took me to town (we did not wake up in ‘town,’ but had to ‘go to town’) to get a suit. It must have been in advance of that first high school debate tournament, but we picked a nice charcoal grey worsted wool number and then headed over to get a couple of ties. I was mesmerized by the various shades of burgundy and pondered the difference between stripes running this way or that way.

Yep, one five foot long glass case contained all the ties that were available. Lots of burgundy, a few blues, and a red one or two.

It was actually shopping for a tie, a few years later, when the proliferation of consumer choice first dawned on me. As I stared at racks and racks of ties I suddenly thought of the aisles of salty snacks and endless TV channels and so many colors of cars that we have to make up names for the shades. Mr. Ford, we’ve come a long way.

In terms of innovation, and I think that is one of the big hammers we need to swing to crack this healthcare thing, more choice for consumers is generally a positive force. Competitors try things and the market decides what works. Good options attract customers and money, while bad options wither and die.

One of the negative consequences of our current healthcare policy is that we’ve driven health insurance back to my early department store experience…we have nothing but burgundy ties.

High minimum coverage requirements for health plans mean they all look alike. The steep cost of compliance has helped create massive, monolithic carriers that are so similar that I can never really remember the difference between Aetna and Anthem, other than alphabetically. State insurance regulations further entrench big incumbents and drive out variation.

We need some Jerry Garcia ties.

Of course, as a market guy I’d allow plans to sell across state lines. No, I don’t think this is a panacea (hey conservative guy at the cocktail party with this as your one-plank healthcare reform plan…you might try expanding your reading list), but it will help. Competition always helps ferret out artificially high prices.

Which means I’d go further. I’d allow and encourage different types of buying groups who could aggregate consumers with similar healthcare needs and then let a broad range of payers compete for their business. I have no idea what that looks like, and that is the point. We have regulators overly dictating to plans who simply then all run the same models and roll out burgundy striped insurance.

Yes advocates of the nanny state, as scandalous as that sounds, we’re going to just have to trust the American people to figure out how to make their own decision on what healthcare insurance to buy. We let them walk out of the hospital with this ‘baby’ thing they just delivered and assume they’ll somehow manage. They can handle this.